Positron emission tomography (PET) of small animals is emerging as a very powerful tool for advancing our understanding of human diseases such as heart disease and cancer. Due to the small (sub-millimeter) feature sizes, dedicated, high resolution PET systems are required to obtain sufficiently detailed images of organs of interest. In particular, sub-millimeter spatial resolution is required for detailed, functional heart imaging of mice. Currently, the detectors for most PET systems are based on arrays of dense scintillators (i.e. indirect detectors). Simulations have shown that the pitch of the scintillator arrays is the dominant factor limiting spatial resolution. However, fabricating and accurately decoding scintillators with element size much smaller than 1-mm is very challenging. In addition, as the scintillator element size decreases, the light collection decreases and consequently the energy and timing resolution of the system decreases. Therefore there is a need for an alternative approach for developing an improved detector for small animal PET imaging. The main objective of the Phase I research is to demonstrate the feasibility of producing very high- resolution PET detectors for small animal imaging using a direct detection approach with room temperature CdTe and CZT detectors. The overall detector design that we plan to use in the proposed effort is expected to satisfy all major requirements for small animal imaging including very high spatial resolution, reasonably high sensitivity, and good timing and DOI resolution. Excellent energy resolution can also be expected from the proposed design. The proposed effort is expected to have a lasting value both in terms of its research potential as well as its commercial scope. The most direct application addressed here is that of small animal PET imaging which is showing enormous promise for increasing our understanding of human disease models. Other selected human high-resolution PET applications for breast, brain and pediatric imaging are also emerging where this technology would be applicable. The proposed technology can also play a role in combined PET/CT and PET/MRI imaging instruments under development. [unreadable] [unreadable]